BEIJING May 29 Foreign firms in China face a
"sobering" business climate, a European lobby said on Thursday,
as concerns over weaker profits and government support for
domestic competitors have almost half EU companies saying the
"golden age" is over.
EU Chamber of Commerce in China member firms lost out on
21.3 billion euros ($29 billion) in revenue in 2013 due to
market access and regulatory barriers, the group said in an
report on business conditions in the world's second-largest
"An abiding sense of pessimism for future performance is
setting in, which is leading many to question whether the good
times have ended," it said.
"...Almost half (46 percent) of European companies believe
that the 'golden age' for multinational companies in China has
At a plenum of the Communist Party last November, China
announced ambitious reform plans that signalled the shift of
China's economy from infrastructure- and export-fuelled growth
towards a slower, more balanced and sustained expansion.
But growth expectations for companies are at their lowest
levels since the peak of the financial crisis, the report said,
drawing on responses from 552 firms.
Despite optimism about policy developments that emerged from
the plenum intended to reduce the government's intervention in
the economy, companies are sceptical about real reform. About
half of respondents said they were not confident meaningful
reforms would be implemented in the next two years.
Economists say China must make fundamental changes if it is
to succeed in its transformation from a bureaucratically run,
pollution-spewing industrial powerhouse to a more balanced,
However, reforms such as freeing up bank interest rates or
dismantling state monopolies will cause much short-term pain and
provide gains only in the long-term, which may make China's
leaders eschew high-risk steps in favour of incremental reform.
China's economic slowdown and rising labour costs were cited
as the top challenges.
"Two-thirds of large companies stated that business in China
has become more complicated and difficult and that more
companies view state-owned enterprises as their main
competitors," European Chamber President Joerg Wuttke told
reporters at a press briefing.
Foreign corporate executives often gripe bitterly in private
about market access and other business challenges in China, but
typically let chambers of commerce publicly voice their
complaints for fear of government retribution.
Foreign firms have long argued that they face unreasonable
discrimination for government procurement in China and that they
have been forced into intellectual property concessions in turn
for market access in some sectors.
China and the European Union are negotiating a bilateral
investment pact, but Europe says it has no interest in the deal
if it omits measures to prise open sectors that have long been
off limits to foreign investors.
(Reporting by Michael Martina; Editing by Nick Macfie)